Proposed legislation would provide “a strong framework” to improve social media companies’ urgency in removing fraudulent advertising, “stopping countless scams before they start,” American Bankers Association President and CEO Rob Nichols said today in a letter to the bill’s sponsors.
The Safeguarding Consumers from Advertising Misconduct, or SCAM, Act by Sens. Bernie Moreno (R-Ohio) and Ruben Gallego (D-Ariz.) would require social media platforms to take additional steps to prevent scam ads from appearing on their platforms. Nichols noted that no other sector invests more to protect customers from fraud than the banking sector. However, banks cannot solve the problem alone.
“When social media companies perform minimal, if any, vetting of the advertisements placed on their networks, criminals can exploit these platforms to impersonate banks and other legitimate companies and gain consumers’ trust,” he said. “As long as fraudulent ads can continue to drive revenue for platforms without consequence, more must be done to protect consumers.
The SCAM Act would require social media companies to verify advertisers’ identity, implement systems to detect fraudulent advertisements, and investigate and remove fake ads, Nichols said. The bill also limits immunity under Section 230 of the Communications Act, which shields social media companies from the legal consequences of what is posted on their platforms.
“For too long, the social media scam ecosystem has been generating profits for social media platforms,” Nichols said. “Under the SCAM Act, a greater volume of scams will no longer mean greater revenue.”
